Economics does no
longer deliver analyses and solutions to problems confronting the global economy
and contrary to expectation it does not move towards general equilibrium. Two
big transformations take place: Mass consumption is replaced with mass
communication—the era of plenty is replaced by scarcities. Economic models have
so far proven inadequate to tackle the turnaround from growth &
distribution of benefits to burden sharing leaving policy makers without advice
and guidelines. The idea of economic thinking (homo oeconomicus) introduced by
Adam Smith does not reflect realities in the beginning of the 21st century. Concentration of economic activities in the hands of relatively few
operators rules out competition in the sense of a free market. Distribution of
income and wealth is steered by a mismatch between supply and demand of skills
rewarding those who by chance have the “right” skills. The concept of work is
changing fast as is the notion of companies with jobs being performed outside
companies eroding the well-established Theory of the Firm. Bringing in other
social sciences it becomes clear that people are less motivated by economic
incentives than presumed, which makes it necessary to broaden economic analyses
and policy making. Interdisciplinary and intersectoral thinking incorporating
human behavior crowds out pure economic reasoning. In a longer term perspective
the way ahead may be to base economic thinking and models on big data analyzing
how data are linked to each other without any prior assumption of theory. The
future for economics may therefore be to go from deduction to induction.